A proposal by state Rep. Paul DeWeese could bring enough funds to MSU to help the school reach its $1.2 billion fund-raising goal, but critics say the proposal is untimely with next year’s budget woes.
DeWeese’s proposal would add a new section to the Michigan tax code to provide a tax credit to individuals and corporations contributing to the endowment funds of state institutions of higher learning.
The Williamston Republican is running against state Rep. Virg Bernero, D-Lansing, for the state’s 23rd District Senate seat in today’s election.
DeWeese says the proposal will encourage businesses to donate to schools, which is key to a successful campaign. In September, MSU officials announced their capital campaign, which aims to raise $1.2 billion within five years.
An endowment is a large investment that collects yearly interest. The donors determine how the university will use that interest. It differs from regular donations to the school in that the university cannot spend the actual donations at the time they’re made.
Individuals contributing to state colleges or universities would receive 50 percent tax credit up to $200 and corporations can get 50 percent up to $10,000 off their Single Business Tax liability. An individual giving MSU $400 toward the school’s endowment fund will receive $200 in tax credit.
“It’s an idea that has merit that I just don’t think we have the ability to absorb this type of tax credit at this time,” said Kelly Chesney, spokeswoman for the state budget office. “These types of proposals typically gain more support in the Legislature when there is enough money to support it.”
Chesney said the proposal may become law one day in a different form - likely in a year with fewer budget constraints. She said the state is already having trouble maintaining critical services, and there could be up to $500 million in shortfalls next year.
Bernero said he’d need to study the economic implications of the proposal before supporting it. He said he’d be delighted to work with him in a lame-duck session after the election.
“I’m supportive of the concept,” he said. “I certainly recognize the importance of endowments over time but those endowments are heavily affected by the stock market too. I know a lot of the endowments are suffering now. It’s not like the endowments are absolutely voucher-safe.”
DeWeese says he doesn’t expect the proposal to become law within a year. He said proposals like this often build coalitions over time.
“I think the economic doldrums we’re in won’t be there forever,” he said.
“I think it’s a creative and efficient way for the state to assist schools.”
